Toggle Dropdown Menu. Search Search Submit Button Submit. Share RSS. Please enable JavaScript if it is disabled in your browser or access the information through the links provided below. Have a question? Ask Us. Last Update: March 01, Under the Federal Reserve Act of , each of the 12 regional reserve banks of the Federal Reserve System is owned by its member banks, who originally ponied up the capital to keep them running.
But the New York Fed — by far the most important of the regional banks — as a matter of policy has previously not disclosed the capital share holdings of its plus member banks. A New York Fed spokeswoman in September declined to comment on the record about the matter. Now, thanks to a Freedom of Information Act request filed late last year by Institutional Investor , we know the truth. II asked the New York Fed for the capital stock holdings of its members as of year-end , as well as for each year going back to The bank responded with copies of what it calls its Capital Stock Master Report, a compendium of shareholdings of member banks, for each of those years.
The big reveal for year-end Citibank, the No. The No. Each bank, after all, has only one vote when it comes to electing bank directors their only shareholder responsibility regardless of stock holdings. And New York Fed shares cannot be traded, shorted, or pledged as collateral.
Stevens, Edward. Skip to content Readability Tools. Reader View. Dark Mode. High Contrast. Reset All. Publications Is the Federal Reserve a privately owned corporation?
September Structure Congress set up the Federal Reserve System to make it autonomous and to isolate it from day-to-day political pressures. But the banks must return all profits, after paying expenses, to the U. The Fed's monetary policy can do its job better when it is shielded from short-term political influence.
It must be free to set expectations, especially about inflation. It cannot do that when its leaders are worried about being fired by an elected official. Fed chairs are predominantly well-respected academic economists. They are valued for that expertise, not for charisma, a large fan base, or public speaking skills. They are accustomed to an environment where ideas are rationally discussed, debated, and evaluated.
If the Fed were beholden to the politics of the day, it could not attract people of that professional caliber. Although it is independent, the Fed is still accountable to the public and to Congress. The Fed can best guide expectations if it is transparent about its actions. It must also clearly communicate its reasons for its actions.
The Fed communicates through frequent and detailed reports. First, the Fed chair and other board members testify frequently before Congress. It also provides detailed meeting minutes three weeks later. Verbatim transcripts are available five years later. The Fed's primary function has been to manage inflation. It has a variety of tools to accomplish that. During the financial crisis of , it created innovative tools to avert a depression.
Since the recession, it also pledged to reduce unemployment and spur economic growth. The Fed works by using its monetary policy tools. Setting low-interest rates is called "expansionary monetary policy.
If the economy grows too fast, it triggers inflation. Increasing interest rates is called "contractionary monetary policy.
That restricts the money supply. As demand falls, businesses lower prices. This creates deflation. That further lowers demand, because consumers delay buying while waiting for prices to fall further. How does the Fed cut interest rates? It lowers the target for the fed funds rate.
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